Antitrust

A partner at a law firm that represented AT&T in its blockbuster merger case has been nominated by President Obama to head the Justice Department office that moved to block the merger.

William Baer, a partner at Arnold & Porter, has been nominated to replace Sharis Pozen as an assistant attorney general over the DOJ's antitrust division, the White House officially announced on Monday. Last week Obama indicated he planned to nominate Baer.

Baer currently heads the antitrust office at Arnold & Porter, whose lawyers staffed top positions in AT&T's failed bid to buy T-Mobile last year. According to a confidentiality statement filed in May with the Federal Communications Commission, which also reviewed the merger, AT&T hired at least 32 lawyers from Arnold & Porter. Baer was not listed.

Pozen's antitrust division at DOJ spearheaded a court battle that ultimately led to AT&T's decision to abandon the deal. Pozen was serving as acting head of the division after Christine Varney left in August.

According to a profile on the Arnold & Porter website, Baer has represented clients like General Electric, Intel, Cisco, and Visa. He previously worked at the Federal Trade Commission when it blocked a1997 merger between Staples and Office Depot.

The Senate Judiciary Antitrust Subcommittee announced Wednesday that it will hold a hearing to examine the impact on competition from the deal struck between Verizon and some of the nation's biggest cable firms to buy some of their spectrum and cross-promote their services.

Subcommittee Chairman Herb Kohl, D-Wis., said in a statement he planned to examine the potential competitive effects the deals will have in markets where both Verizon and the cable firms offer both video and Internet services.

Kohn has "not reached any conclusions on this deal yet - just beginning an inquiry which this hearing will be a part of," Kohl's spokeswoman said. The committee has not set a firm date but is aiming to hold the hearing sometime after the President's Day break.

Verizon announced late last year that it had struck deals with Bright House Networks, Comcast, Cox, and Time Warner to buy some spectrum from them and also to cross-promote their services.

Public interest groups welcomed Kohl's interest. They say the deals raise serious competitive issues given that in most markets there are only two major broadband, phone and television providers.

"If, as these companies claim, they cannot compete against one another, Congress and the FCC need to consider whether we will need to return to the world of regulated natural monopolies," Public Knowledge Legal Director Harold Feld said in a statement. "While Public Knowledge believes that competition is better, there are serious questions to be answered whether true broadband competition can ever emerge if one provider in a two-company broadband market starts selling the products of the other company."

The US Justice Department is investigating Verizon's deal to buy $3.6 billion worth of airwaves from cable companies including Comcast, Time Warner and Bright House Networks, the Washington Post reports.

But the Post says analysts have downplayed the significance of the investigation, saying the reviews by Justice and the FCC are both expected and perfunctory.

Yesterday, Verizon asked the FCC for permission to do the deal.

The top leaders of the Senate Judiciary Antitrust Subcommittee called on the Federal Trade Commission Monday to investigate whether Google's moves to expand its services beyond search violate antitrust law.

In a letter to FTC Chairman Jon Leibowitz, subcommittee Chairman Herb Kohl, D-Wis., and ranking member Mike Lee, R-Utah, raised many of the issues that were highlighted during a hearing before their panel in September that featured Google Executive Chairman Eric Schmidt as well as critics of the online giant.

Kohl and Lee noted that Google's move into secondary services beyond just search results such as maps, travel services and finance raises questions about its role as an unbiased provider of Internet search results. Google rivals argue that the company's search results are biased in favor of Google's own products and services.

"We believe these allegations regarding Google's search engine practices raise important competition issues," the senators wrote. "We therefore urge the FTC to investigate the issues raised at our subcommittee hearing to determine whether Google's actions violate antitrust law or substantially harm consumers or competition in this vital industry."

Despite their call for an investigation, the senators said they are not taking a position on whether Google's practices are legal or not.

The FTC has acknowledged it is currently conducting an antitrust investigation of Google but has not commented on the areas it is examining.

In a statement, Google said, "These letters are customary, and we appreciate that the committee reserved judgment as we continue to cooperate with the FTC. We are committed to competing fairly on the Internet's level playing field."

The company's critics, meanwhile, applauded the senators' letter. "This bipartisan letter validates the many concerns held by the members of FairSearch.org and thousands of other companies about the impact Google's anti-competitive behavior has on innovation and consumer choice," FairSearch.org, a coalition made up of Microsoft, Expedia, Kayak and other Google rivals, said in a statement.

The advocacy groups are already cheering -- AT&T has given up in the face of opposition from both the FCC and the Justice Department.

"Good riddance. The Obama administration deserves praise and credit for standing up to AT&T's relentless lobbying and propaganda," Free Press President and CEO Craig Aaron says in a statement.

The company says it'll try to find the spectrum it needs elsewhere and doesn't go out cheerfully.

"The actions by the Federal Communications Commission and the Department of Justice to block this transaction do not change the realities of the U.S. wireless industry. It is one of the most fiercely competitive industries in the world, with a mounting need for more spectrum that has not diminished and must be addressed immediately," the company complains bitterly in its release.

"The AT&T and T-Mobile USA combination would have offered an interim solution to this spectrum shortage. In the absence of such steps, customers will be harmed and needed investment will be stifled."

Read the full story here as it develops.

AT&T is in talks to sell off assets to regional wireless provider Leap Wireless as a way to mitigate the government's concerns about the endangered merger with T-Mobile, according to a report in the New York Times.

They are negotiating a way for AT&T to sell it a big piece of T-Mobile's customer accounts and some of its wireless spectrum, "according to people involved in the negotiations," the article says.

The idea of the asset sale is that it will beef up Leap to preserve competition while scaling back how big AT&T becomes after the merger. Bloomberg has also reported that AT&T is planning to roll out a plan for divestitures in hopes of salvaging the merger.

Neither Leap or AT&T responded to questions about the report.

AT&T has said from the day the merger was announced that it expects regulatory clearance could be contingent on divestitures.

Could a big Leap deal be enough to satisfy the Justice Department? Analysts say mollifying Justice with divestitures could be tough.

"We view the odds of reaching an agreeable settlement as quite long, as the government would be looking for some type of deal that would maintain four reasonably strong national wireless carriers. An AT&T deal with T-Mobile, even assuming significant divestitures, would -- at best -- create a weakened fourth national carrier," Christopher King of Stifel Nicolaus wrote in a note to clients last week.

Merger opponent Bert Foer, president of the American Antitrust Institute, said Leap might not be hefty enough to satisfy regulators.

"The question is, can Leap actually make the leap into being a viable replacement for T-Mobile? I come at it as an outsider thinking it's not very likely to succeed," he said.

The Justice Department and the Federal Communications Commission have both moved to block the deal.

A status hearing on the Department of Justice's lawsuit against AT&T's proposed takeover of T-Mobile USA, originally scheduled for Wednesday, has been delayed to Dec. 9, an AT&T spokesman says.

Federal District Judge Ellen Huvelle has a scheduling conflict., according to court papers.
Huvelle has already ruled that Sprint and C Spire may bring a separate lawsuit against the proposed $39 billion merger.

There was lots of action in the case last week, with the Federal Communications Commission coming out in opposition to the deal and AT&T withdrawing its application with the FCC while it fights DOJ.

If AT&T and the Justice Department do not reach a settlement beforehand, the trial is set to start on Feb. 13. Huvelle has said during she wants it to conclude in less than six weeks.

After the Federal Communications Commission said on Tuesday that AT&T's merger with T-Mobile would destroy rather than create jobs, AT&T executives shot back with a statement questioning the FCC's credibility.

AT&T Senior Vice President Jim Cicconi pointed to the FCC's claim that its $4.5 billion plan to develop broadband networks would create 500,000 jobs over the next 6 years.

"Yet somehow in our merger, the FCC staff concluded that a far greater investment in broadband -- $8 billion -- plus firm commitments on job preservation and enhancement, will instead result in 'massive loss of US jobs and investment,' Cicconi said in a statement.

In a nod to the political arguments about economic stimulus, Cicconi painted the FCC conclusion as favoring government over the private sector.

"This notion, that when government spends money on broadband it creates jobs, but when a private company spends money it doesn't, is clearly wrong on its face, and raises questions about the credibility of anyone at the FCC who would make such a claim," he said.

On Tuesday FCC Chairman Julius Genachowski circulated a draft order that would refer the merger to an administrative law judge. The order is expected to be approved by the Democrat-dominated commission in a move that signals the FCC's intention to block the transfer of T-Mobile's spectrum licenses to AT&T.

"The record clearly shows that -- in no uncertain terms -- this merger would result in a massive loss of US jobs and investment," FCC officials said in a statement.

Wireless carrier MetroPCS may be the frontrunner to buy assets that AT&T could be forced to divest to win approval of its bid to buy T-Mobile USA, Bloomberg reports.

Steve Jobs' biographer told 60 Minutes in an interview that the late co-founder of Apple refused surgery for his rare form of pancreatic cancer that could have saved his life.

A CNET columnist argues that those looking for another celebrity-like figure to replace Jobs will be disappointed.

Read all of today's e-Reads on our Tech page.

C Spire, the regional wireless operator formerly known as Cellular South, will be the fourth wireless operator to get the newest iPhone, gaining access to the popular smart phone before its larger rival T-Mobile USA, Reuters reports.

Microsoft CEO Steve Ballmer said the company got lucky when its bid to buy Yahoo in 1998 was rejected, CNN reports.

Meanwhile, Microsoft Chairman Bill Gates may be called to testify at a hearing on an antitrust lawsuit filed against the software giant by Novell, according to PC Magazine.

Facebook plans to join Germany's top information technology trade association amid growing concern among its German users over the social networking site's privacy and security policies, the Associated Press reports.

Apple launched a tribute page to co-founder Steve Jobs where it has posted the million messages the company received after Jobs' death earlier this month, according to Computerworld.

For all of today's e-Reads, go to National Journal's Tech page.